Karachi, June 14, 2025 – The Sindh government has set an ambitious tax collection target of Rs388 billion for the Sindh Revenue Board (SRB) for the fiscal year 2025-26, marking a significant increase of around 20 percent from the previous year.
According to official budget documents, the SRB had been assigned a collection target of Rs350 billion for the outgoing fiscal year, but actual revenue estimates were around Rs324 billion. The new target reflects the provincial government’s focus on enhancing revenue generation through local resources amid growing fiscal pressures.
The SRB, which is primarily responsible for the collection of sales tax on services in Sindh, has now also been entrusted with the task of collecting agricultural income tax. This expanded mandate is part of the province’s broader strategy to diversify its revenue streams and strengthen its fiscal independence.
In his budget speech, Sindh Chief Minister Syed Murad Ali Shah stated that the government must align provincial expenditures with available revenues. “Rising developmental needs and growing international financial obligations make it imperative to generate additional funds from indigenous sources,” he said. The chief minister assured that efforts had been made to minimize the impact of new measures on lower-income groups.
A key fiscal reform announced in the speech was the transition from the existing Positive List to a Negative List regime for Sindh sales tax on services. Under the new system, all services will be deemed taxable unless specifically exempted. This shift is aimed at expanding the tax base, reducing tariff disputes, and streamlining collection processes. Essential and social services, however, will remain exempt, and certain newly taxed services will attract reduced rates.
To further support small businesses, service providers with annual turnovers below Rs4 million will remain exempt from sales tax. Additionally, several facilitative measures have been introduced:
• The sales tax rate on services currently taxed at 10% will be reduced to 8%.
• To promote vehicle safety and public welfare, the sales tax on third-party vehicle insurance will be cut from 15% to 5%.
• The exemption threshold for restaurants and caterers has been raised from Rs2.5 million to Rs5 million in annual turnover.
• Procedural simplifications will be implemented, including easier registration and reduced-rate service options.
Through these changes, the Sindh government aims to empower the SRB to meet its enhanced collection target while promoting economic inclusivity and reducing the compliance burden on smaller enterprises. The upcoming fiscal year will test the effectiveness of these reforms as Sindh works to strengthen its fiscal framework and ensure sustainable revenue growth.